OF THE

UNIVERSITY

OF

CALIFORNIA

THE PEOPLE AND THE RAILWAYS.

CHAPTER I.

IS COMBINATION CRIME ?

WHEN, once upon a time, announcement was made, in despotic opulence of mural decoration, that Mr. Barnum's and Mr. Forepaugh's circuses had pooled their attractions under a single tent, the American small boy lodged no protest, nor did he invoke the statutes of this republic against the dangers with which its institutions were threatened. But when whisky, or coal, or cottonseed oil, or prunes, or beeswax, propose to adhere in happy family compact, the occasion is not allowed to pass without jeremiad on the perils of this commonwealth and the departure of the liberties of this people.

In a paper entitled "Modern Feudalism," in the "North American Review" for April, 1887, I understand Mr. James F. Hudson to suggest that.any old-fashioned ideas as to the economy of large producers over small ones, and supposed consequential security of wages, greatest good of the greatest number, etc., which may stiil obtain in the community, are survivals of the dark ages, and without place in the enlightened civilization of this continent; and to assert that any combination of corporations or large manufacturers or producers for manufacture or production of a single staple, which shall purchase the interest or business of smaller manufacturers or producers, is a menacing danger, not only to the consumer, but to the State. Mr. Hudson has nothing to submit as to any possible small competitor who might perhaps be willing or even anxious to be crushed out "for a consideration" rather than assume all the chances of himself crushing out the larger competitor. Nor do I find him discussing the question as to what interest

it is to the consumer whether the product he consumes be manufactured or quarried by a small concern or a large one. His propositions, however, are sufficiently startling to the old-fashioned reader of what once was the science of political economy to warrant, I think, notice in these pages.

Mr. Hudson, to begin with, is of opinion that any incorporation, combination, or "trust " organized for business purposes is a "corner” in the thing manufactured, and therefore against the written law of the land as well as the public interest. He is wrong here at the outset. Everybody who knows anything about the matter knows that to "corner a product is to raise its price, not to the consumer, but to the operators against whom the "corner" is engineered. However disastrous a "corner" may be to the "shorts" who fight it: ultimately fatal to the schemers (who risk public indignation if they succeed or the prospect of bankruptcy if they fail in sustaining it), I have yet to learn of any permanent injury to the consumer-or to the great body of the people-resulting from the wickedest corner that ever was attempted. Without attempting any palliation of or excuse for the gamblers who stack staples instead of "chips" and shuffle values instead of cards, it is yet, perhaps, proper to suggest that even trusts, combinations, and incorporations for business purposes are of some ultimate good to the community and benefit to the breadwinner; and to point out the actual fact that, so far from raising, it is to the immediate interest of a combination of small business interests into a large one to at once cheapen the prices of its product to the very minimum margin of profit at which manufacture can be carried on. Otherwise the crop of new combinations to be bought out would be endless. For, surely, so long as the product in which the combination deals can be manufactured at a profit, just so long will there be manufacturers. Mr. Hudson, no doubt, burns gas. But any consumer of illuminating oil can tell him that he can buy from an agent of Mr. Hudson's pet grievance, the Standard Oil Company, cheaper than he

*

* The Standard Oil Company has so reduced the cost of the process of refining that the price of refined oil has been lowered from seventy to less

could before there was any such terrible "octopus," and when every producer had his favorite jobber; and if Mr. Hudson ever sent a telegram from New York to Chicago before the days of the Western Union Telegraph Company (which, naughty as it is, only charges twenty-five cents for ten words to Chicago), at the rate of about two dollars per ten words to Chicago, without grumbling at the positive incongruity of the price, he is a much more reasonable man than some of his readers take him to be. And to demonstrate that whatever the immediate causes-the immediate effect of combinations is apt to be to convenience rather than to incommode the customer or client; let me allude, in passing, to (what everybody knows) the fact that the single powerful ownership of the telegraph lines of the United States has resulted in the steady improvement of the service (the sending of four messages at once upon a single wire and in opposite directions being not the greatest of these improvements). Perhaps Mr. Hudson thinks that these improvements would have been more patriotically used if the inventors had employed them to break down, instead of to aggrandize and strengthen, the "monopoly." But unless Mr. Hudson dreams of a paradise where inventors seek not to be paid, are not stimulated to activity by hope of reward (if, that is, he writes for his contemporaries and not for an ideal republic), he must be aware of the impossibility of legislating away the inducements to human industry or the instinct of men to prefer worldly prosperity and bank accounts to poverty and dependence. Had these inventions been used to break down existing companies, the result would have been finally the same. They would have been purchased by the strongest purse. But the inventor would first have been ruined. But Mr. Hudson, for one, still writes. Such propositions as that there is not a dollar of capital in the United States which does not represent somebody's labor and somebody's self-denial, or that every

than seven cents per gallon. The people who paid four dollars per capita for light now pay less than forty cents per capita, which is equivalent to a benefit to the people of this country (counting them at 60,000,000) of $216,000,000 per annum.--"New York Tribune," May 15, 1867.

dollar which accrues in profit to-day to the railroads or other great corporate interests of this country represents from two hundred to three hundred dollars paid directly, and in cash, to the wage-workers (the very men for whom Mr. Hudson assumes to speak)-such propositions, I say, do not deter him in the least, nor do I anticipate that they ever will. If the corporations of the United States (chartered by the people of the United States for transportation, manufacturing, and other purposes), in endeavoring to keep abreast of the commerce and trade of the people of the United States, have grown to such enormous proportions as to attract the envy and enmity of those not holding their securities, I respectfully submit that that is no reason why those corporations should be punished, or their interests wrecked, embarrassed, or confiscated, Mr. Hudson to the contrary notwithstanding.

The fact the truth is, that (however it may be in other countries) the accumulation of wealth and centralization of commerce in great combinations has never, in the United States, been a source of oppression or of poverty to the non-capitalist or wageworker. The greatest oppressors of the poor, to the contrary, are not always the largest corporations. It is quite as likely, for example, to be a small Chatham Street haberdasher (who himself struggles against the bottom prices of his next-door "puller-in "), as a Broadway furnishing company, who pays a starved seamstress three cents apiece for making shirts, and holds a chattel mortgage on her sewing-machine as security for the material upon which she operates it. Mr. Hudson appears to infer that the smaller the manufacturer, the better off the consumer and the wage-worker; that the smaller he is, the smaller his prices to the one and the higher his wages to the other. I do not claim that the larger the shirt-dealer, the higher the prices he pays to his seamstresses. I do not claim that the soulless individual becomes soulful the moment he finds himself incorporated (the epigram is the other way). But I do claim that the converse is not the fact. I have not had Mr. Hudson's opportunities, perhaps; but, so far as the laws of human selfishness and greed go,

I happen to know that the larger the principal the more secure the wages of the wage-worker, and the scale thereof at least not necessarily or even probably lower.

The fact is (whether Mr. Hudson will ever become aware of it is another and less important consideration), that the very first thing a successful manufacturing combination does, and must do, is to put the price of its product down to a figure where it will not pay for designing speculators to form new stock companies for it to "crush" at a hundred or more cents on a dollar. For, did it keep up its prices, either one of two things would inevitably happen: either new factories would be started, or the inventive genius of this people would invent a substitute for the product they furnished, and so ruin the combination beyond resurrection.

So rapidly have prices lowered, indeed, in the past, and so constantly are they still falling, that earnest economists have begun. to wonder what the end would be; and even the labor agitators have turned from the (to them) seemingly abstract question of hours and wages, as between the employer and the employed, to find in this the supposed greatest peril of the latter. It even appears that one Powderly, a chief of one of the so-called "labor movements," has made it the text of certain of his harangues. And, with what Dickens would call perhaps "a fatal freshness," Mr. Hudson himself (who has just left denying the right of industries to centralize themselves because the first thing they did after centralization was to put up prices), on the next page, says, "Mr. Powderly has inveighed against the sin of cheapness, and given his assent to the principle of combination to raise prices, on the assumption that such combinations involve an advance in wages." (Though to what purpose Mr. Hudson has preserved this excerpt his context fails to discover, since good faith to his own argument, if not to his readers, should have led to its suppression.)

But Mr. Hudson rattles on as follows: "It is an old truth that commerce, founded on the basis of distributing the staples of life at the least cost, is the highest practical benevolence; while devices to rule commerce by the suspension of competition,